EMC, NetApp Competitor Nimble Files to Go Public

By Tiernan Ray

Nimble Storage of San Jose, California, one of a raft of hot data storage startups, today filed an S1 prospectus for a public offering with the Securities & Exchange Commission, led by Goldman Sachs, Morgan Stanley, Pacific Crest Securities, William Blair, Stifel Nicolaus, Oppenheimer & Co., and Needham & Co.

The company is among a gaggle of privately held firms that are hoping to give EMC (EMC) and NetApp (NTAP) a run for their money, in part through more innovative use of flash solid-state drives (SSD), though they also tout more intelligent software and service and support options. Other startups include Skyera, Pure Storage, Coho Data, and Coraid. Yet another outfit, Violin Memory (VMEM), went public last month.

I wrote about the group in a Tech Trader column in Barron’s print magazine in early September. I also had a bunch to say about the storage competition and how it threatens EMC and NetApp in this week’s Barron’s feature, “Building the Cloud.”

Nimble had $53.8 million in revenue last year, nearly quadruple the level the year before, and a $27.9 million net loss, or 51 cents per share. The company brought in $51 million in the first six months of this year, up 165%, and had a $19.86 million net loss, or 34 cents per share.

That is roughly equivalent, on the top line, with Violin Memory’s $51 million in the first six months of this year, though Violin’s net loss of $59 million in that period was obviously much larger.

The company had amassed a stockholders’ deficit of $69 million through July of this year. However, the company also lists a pro-forma stockholder equity figure of $29 million.

The company describes financing since January of 2011 totaling $88.5 million.

As with many of these startups, the executive team are mostly storage industry veterans.

Nimble’s CEO Suresh Vasudevan was formerly CEO of Omneon Video Networks, which made storage equipment for broadcasters, and before that was at NetApp for nine years. Founder and head of engineering Varun Mehta was previously at PeakStream, a software provider bought by Google (GOOG) in 2007. Before that, he worked at storage software vendor Data Domain, and at NetApp. CTO Umesh Maheshwari was also at Data Domain.

Reviewing the S1 today, ISI Group‘s Brian Marshall, who has been following the company for some time, and has met repeatedly with management, writes that “In our view, Nimble is a terrific company with a great management team and innovative product offering which uniquely combines the key attributes of flash storage (i.e., performance) with that of HDDs (i.e., capacity, low-cost).”

Marshall notes that 90% of sales for the company come through resellers, and that the company’s been able to broaden its customer base to reduce concentration with large customers: “Top 10 channel partners represented 37% for year ended January 2013 (down from 43% in Jan-2012). Only one 10%+ customer (Advanced Media Services which is connected to CDW). No 10%+ end customers.”

EMC shares are up 43 cents, or 1.8%, at $25.05, while NetApp shares are up 64 cents, or 1.6%, at $41.28.

Violin Memory shares today are up 3 cents, or 0.4%, at $7.22, still well below the IPO offer price of $9.

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